##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE TRANSITION PERIOD FROM  TO
 Commission File number 0-25033
 Superior Bancorp
 (Exact Name of Registrant as Specified in its Charter)
 Delaware
    
    63-1201350(State or Other Jurisdiction of Incorporation)
    
    (IRS Employer Identification No.)
 17 North 20th Street, Birmingham, Alabama 35203
 (Registrants Telephone Number, Including Area Code)
  þ o
 
 o þ o
  o þ
  Class
    
    Outstanding as of March 31, 2007Common stock, $.001 par value
    
    34,658,368




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##### 



TABLE OF CONTENTS
 PART I FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTS
    
    
    2ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    10ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
    
    
    20ITEM 4. CONTROLS AND PROCEDURES
    
    
    21PART II. OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGS
    
    
    21ITEM 1A. RISK FACTORS
    
    
    21ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    22ITEM 3. DEFAULTS UPON SENIOR SECURITIES
    
    
    22ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    22ITEM 5. OTHER INFORMATION
    
    
    22ITEM 6. EXHIBITS
    
    
    22SIGNATURES
    
    
    23EX-10.1 LOAN AGREEMENT, DATED JANUARY 26, 2007, BETWEEN SUPERIOR BANCORP AND U.S. BANK NATIONAL ASSOCIATIONEX-10.2 STOCK PLEDGE AGREEMENT, DATED JANUARY 26, 2007, GIVEN BY SUPERIOR BANCORP IN FAVOR OF U.S. BANK NATIONAL ASSOCIATIONEX-31.01 SECTION 302 CERTIFICATION OF THE CEOEX-31.02 SECTION 302 CERTIFICATION OF THE CFOEX-32.01 SECTION 906 CERTIFICATION OF THE CEOEX-32.02 SECTION 906 CERTIFICATION OF THE CFO




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SUPERIOR BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per share data)
 March 31,
    
    
    December 31,2007
    
    
    2006(UNAUDITED)ASSETSCash and due from banks
    
    $
    47,339
    
    
    $
    49,783Interest-bearing deposits in other banks
    
    
    12,447
    
    
    
    10,994Federal funds sold
    
    
    14,889
    
    
    
    25,185Investment securities available for sale
    
    
    342,837
    
    
    
    354,716Tax lien certificates
    
    
    12,188
    
    
    
    16,313Mortgage loans held for sale
    
    
    28,059
    
    
    
    24,433Loans, net of unearned income
    
    
    1,675,317
    
    
    
    1,639,528Less: Allowance for loan losses
    
    
    (18,977
    )
    
    
    (18,892
    )Net loans
    
    
    1,656,340
    
    
    
    1,620,636Premises and equipment, net
    
    
    95,689
    
    
    
    94,626Accrued interest receivable
    
    
    13,440
    
    
    
    14,387Stock in FHLB
    
    
    13,383
    
    
    
    12,382Cash surrender value of life insurance
    
    
    40,895
    
    
    
    40,598Goodwill and other intangibles
    
    
    128,743
    
    
    
    129,520Other assets
    
    
    45,561
    
    
    
    47,417TOTAL ASSETS
    
    $
    2,451,810
    
    
    $
    2,440,990LIABILITIES AND STOCKHOLDERS EQUITYDeposits:Noninterest-bearing
    
    $
    189,729
    
    
    $
    191,323Interest-bearing
    
    
    1,670,964
    
    
    
    1,679,518TOTAL DEPOSITS
    
    
    1,860,693
    
    
    
    1,870,841Advances from FHLB
    
    
    200,840
    
    
    
    187,840Security repurchase agreements
    
    
    23,022
    
    
    
    23,415Notes payable
    
    
    5,993
    
    
    
    5,545Junior subordinated debentures owed to unconsolidated subsidiary trusts
    
    
    43,859
    
    
    
    44,006Capital lease obligation
    
    
    3,785
    
    
    
    3,798Accrued expenses and other liabilities
    
    
    35,087
    
    
    
    29,458TOTAL LIABILITIES
    
    
    2,173,279
    
    
    
    2,164,903STOCKHOLDERS EQUITYCommon stock, par value $.001 per share; authorized 50,000,000 shares; shares issued 34,739,044 and 34,732,345, respectively; outstanding 34,658,368 and 34,651,669, respectively
    
    
    35
    
    
    
    35Surplus
    
    
    253,994
    
    
    
    253,815Retained earnings
    
    
    28,234
    
    
    
    26,491Accumulated other comprehensive loss
    
    
    (1,024
    )
    
    
    (1,452
    )Treasury stock, at cost
    
    
    (716
    )
    
    
    (716
    )Unearned ESOP stock
    
    
    (1,992
    )
    
    
    (2,086
    )TOTAL STOCKHOLDERS EQUITY
    
    
    278,531
    
    
    
    276,087TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    2,451,810
    
    
    $
    2,440,990
  2




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SUPERIOR BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 THREE MONTHS ENDEDMARCH 31,2007
    
    
    2006INTEREST INCOMEInterest and fees on loans
    
    $
    34,312
    
    
    $
    18,418Interest on taxable securities
    
    
    4,439
    
    
    
    2,760Interest on tax-exempt securities
    
    
    129
    
    
    
    78Interest on federal funds sold
    
    
    127
    
    
    
    35Interest and dividends on other investments
    
    
    737
    
    
    
    358Total interest income
    
    
    39,744
    
    
    
    21,649INTEREST EXPENSEInterest on deposits
    
    
    17,468
    
    
    
    8,413Interest on other borrowed funds
    
    
    3,249
    
    
    
    2,471Interest on subordinated debentures
    
    
    993
    
    
    
    761Total interest expense
    
    
    21,710
    
    
    
    11,645NET INTEREST INCOME
    
    
    18,034
    
    
    
    10,004Provision for loan losses
    
    
    705
    
    
    
    600NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
    
    
    17,329
    
    
    
    9,404NONINTEREST INCOMEService charges and fees on deposits
    
    
    1,786
    
    
    
    1,031Mortgage banking income
    
    
    950
    
    
    
    531Investment securities gains
    
    
    243
    
    
    
    Change in fair value of derivatives
    
    
    (152
    )
    
    
    70Increase in cash surrender value of life insurance
    
    
    448
    
    
    
    420Other income
    
    
    811
    
    
    
    450TOTAL NONINTEREST INCOME
    
    
    4,086
    
    
    
    2,502NONINTEREST EXPENSESSalaries and employee benefits
    
    
    10,098
    
    
    
    5,869Occupancy, furniture and equipment expense
    
    
    3,127
    
    
    
    1,847Amortization of intangibles
    
    
    304
    
    
    
    72Merger-related costs
    
    
    319
    
    
    
    Other operating expenses
    
    
    4,178
    
    
    
    3,018TOTAL NONINTEREST EXPENSES
    
    
    18,026
    
    
    
    10,806Income before income taxes
    
    
    3,389
    
    
    
    1,100INCOME TAX EXPENSE
    
    
    1,091
    
    
    
    250NET INCOME
    
    $
    2,298
    
    
    $
    850BASIC NET INCOME PER COMMON SHARE
    
    $
    0.07
    
    
    $
    0.04DILUTED NET INCOME PER COMMON SHARE
    
    $
    0.07
    
    
    $
    0.04Weighted average common shares outstanding
    
    
    34,438
    
    
    
    20,015Weighted average common shares outstanding, assuming dilution
    
    
    35,038
    
    
    
    20,673
  3




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SUPERIOR BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
(Dollars in thousands)
 THREE MONTHS ENDEDMarch 31,2007
    
    
    2006NET CASH (USED) PROVIDED BY OPERATING ACTIVITIES
    
    $
    (3,142
    )
    
    $
    6,043CASH FLOWS FROM INVESTING ACTIVITIES:Net (increase) decrease in interest-bearing deposits in other banks
    
    
    (1,453
    )
    
    
    1,104Net decrease (increase) in federal funds sold
    
    
    10,296
    
    
    
    (4,905
    )Proceeds from sales of securities available for sale
    
    
    2,400
    
    
    
    Proceeds from maturities of investment securities available for sale
    
    
    16,253
    
    
    
    3,193Purchases of investment securities available for sale
    
    
    (6,326
    )
    
    
    (877
    )Redemptions of tax lien certificates
    
    
    4,125
    
    
    
    Net increase in loans
    
    
    (24,840
    )
    
    
    (26,323
    )Purchases of premises and equipment
    
    
    (2,099
    )
    
    
    (1,145
    )Proceeds from sale of repossessed assets
    
    
    750
    
    
    
    Increase in stock in FHLB
    
    
    (1,001
    )
    
    
    Other investing activities, net
    
    
    (230
    )
    
    
    (192
    )Net cash used by investing activities
    
    
    (2,125
    )
    
    
    (29,145
    )CASH FLOWS FROM FINANCING ACTIVITIES:Net (decrease) increase in deposit accounts
    
    
    (10,232
    )
    
    
    34,157Net increase (decrease) in FHLB advances and other borrowed funds
    
    
    12,607
    
    
    
    (17,400
    )Proceeds from note payable
    
    
    5,250
    
    
    
    Payments made on notes payable
    
    
    (4,802
    )
    
    
    (52
    )Proceeds from sale of common stock
    
    
    
    
    
    
    721Net cash provided by financing activities
    
    
    2,823
    
    
    
    17,426Net decrease in cash and due from banks
    
    
    (2,444
    )
    
    
    (5,676
    )Cash and due from banks at beginning of period
    
    
    49,783
    
    
    
    35,088CASH AND DUE FROM BANKS AT END OF PERIOD
    
    $
    47,339
    
    
    $
    29,412
  4




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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 Note 1  Basis of Presentation
   Note 2  Recent Accounting Pronouncements
 FASB Interpretation No. 48
 Accounting for Uncertainty in Income
Taxes Accounting for
Income Taxes
    Statement of Financial Accounting Standards No. 157
 Fair Value
Measurements
 5




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Statement of Financial Accounting Standards No. 159
 The Fair Value Option for Financial Assets
and Financial Liabilities
 Note 3  Acquisitions
   Pro Forma Results of Operations
  (Dollars in thousands, except per share data)
    
    2006Net interest income and noninterest income after provision for loan losses
    
    $
    21,141Net income
    
    
    2,329Earnings per common share  basic
    
    $
    0.07Earnings per common share  diluted
    
    $
    0.07
 Pending Acquisitions
  6




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Note 4  Segment Reporting
   Alabama
    
    FloridaRegion
    
    Region
    
    CombinedThree months ended March 31, 2007Net interest income
    
    $
    13,385
    
    
    $
    4,649
    
    
    $
    18,034Provision for loan losses
    
    
    641
    
    
    
    64
    
    
    
    705Noninterest income
    
    
    3,774
    
    
    
    312
    
    
    
    4,086Noninterest expense (1)
    
    
    15,049
    
    
    
    2,977
    
    
    
    18,026Income tax expense
    
    
    477
    
    
    
    614
    
    
    
    1,091Net income
    
    
    348
    
    
    
    1,950
    
    
    
    2,298Total assets
    
    
    1,926,823
    
    
    
    524,987
    
    
    
    2,451,810Three months ended March 31, 2006Net interest income
    
    $
    6,360
    
    
    $
    3,644
    
    
    $
    10,004Provision for loan losses
    
    
    789
    
    
    
    (189
    )
    
    
    600Noninterest income
    
    
    2,256
    
    
    
    246
    
    
    
    2,502Noninterest expense (1)
    
    
    9,714
    
    
    
    1,092
    
    
    
    10,806Income tax (benefit) expense
    
    
    (706
    )
    
    
    956
    
    
    
    250Net (loss) income
    
    
    (1,181
    )
    
    
    2,031
    
    
    
    850Total assets
    
    
    1,129,776
    
    
    
    302,191
    
    
    
    1,431,967
 
 (1)
    
    Noninterest expense for the Alabama region includes all
expenses for the holding company and all administrative expenses of
the bank, which have not been prorated to the Florida region. 7




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Note 5  Net Income per Common Share
  Three Months EndedMarch 31,2007
    
    
    2006Numerator:For basic and diluted, net income
    
    $
    2,298
    
    
    $
    850Denominator:For basic, weighted average common shares outstanding
    
    
    34,438
    
    
    
    20,015Effect of dilutive stock options and restricted stock
    
    
    600
    
    
    
    658Average diluted common shares outstanding
    
    
    35,038
    
    
    
    20,673Basic net income per common share
    
    $
    .07
    
    
    $
    .04Diluted net income per common share
    
    $
    .07
    
    
    $
    .04
 Note 6  Comprehensive Income (Loss)
  Note 7  Income Taxes
  Note 8  Stockholders Equity
   8




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Risk-free interest rate
    
    
    4.47
    %Volatility factor
    
    
    29.34
    %Expected term (in years)
    
    
    5.00Dividend yield
    
    
    0.00
    %
  Weighted-Weighted-
    
    
    AverageAverage
    
    
    RemainingExercise
    
    
    Contractual
    
    
    AggregateNumber
    
    
    Price
    
    
    Term
    
    
    Intrinsic ValueUnder option, beginning of period
    
    
    3,042,597
    
    
    $
    8.07Granted
    
    
    21,096
    
    
    
    11.22Under option, end of period
    
    
    3,063,693
    
    
    $
    8.09
    
    
    
    7.16
    
    
    $
    8,276,398Exercisable at end of period
    
    
    2,861,097
    
    
    $
    7.90
    
    
    
    6.55
    
    
    $
    8,324,363Weighted-average fair value per option of options granted during the period
    
    $
    3.83
  9




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
             10




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Average
Balances, Income, Expense and Rates
 Three Months Ended March 31,2007
    
    
    2006Average
    
    
    Income/
    
    
    Yield/
    
    
    Average
    
    
    Income/
    
    
    Yield/Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate(Dollars in thousands)ASSETSInterest-earning assets:Loans, net of unearned income (1)
    
    $
    1,668,124
    
    
    $
    34,312
    
    
    
    8.34
    %
    
    $
    996,773
    
    
    $
    18,418
    
    
    
    7.49
    %Investment securitiesTaxable
    
    
    354,388
    
    
    
    4,439
    
    
    
    5.08
    
    
    
    243,907
    
    
    
    2,760
    
    
    
    4.59Tax-exempt (2)
    
    
    12,716
    
    
    
    195
    
    
    
    6.19
    
    
    
    8,452
    
    
    
    118
    
    
    
    5.67Total investment securities
    
    
    367,104
    
    
    
    4,634
    
    
    
    5.12
    
    
    
    252,359
    
    
    
    2,878
    
    
    
    4.63Federal funds sold
    
    
    8,888
    
    
    
    127
    
    
    
    5.79
    
    
    
    3,005
    
    
    
    35
    
    
    
    4.72Other investments
    
    
    33,293
    
    
    
    737
    
    
    
    8.99
    
    
    
    18,309
    
    
    
    358
    
    
    
    7.93Total interest-earning assets
    
    
    2,077,409
    
    
    
    39,810
    
    
    
    7.77
    
    
    
    1,270,446
    
    
    
    21,689
    
    
    
    6.92Noninterest-earning assets:Cash and due from banks
    
    
    41,919
    
    
    
    
    
    
    
    
    
    
    
    28,607Premises and equipment
    
    
    95,022
    
    
    
    
    
    
    
    
    
    
    
    56,229Accrued interest and other assets
    
    
    226,966
    
    
    
    
    
    
    
    
    
    
    
    76,835Allowance for loan losses
    
    
    (18,898
    )
    
    
    
    
    
    
    
    
    
    
    (12,105
    )Total assets
    
    $
    2,422,418
    
    
    
    
    
    
    
    
    
    
    $
    1,420,012
 11




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Three Months Ended March 31,2007
    
    
    2006Average
    
    
    Income/
    
    
    Yield/
    
    
    Average
    
    
    Income/
    
    
    Yield/Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate(Dollars in thousands)LIABILITIES AND STOCKHOLDERS EQUITYInterest-bearing liabilities:Demand deposits
    
    $
    513,074
    
    
    $
    4,502
    
    
    
    3.56
    %
    
    $
    328,886
    
    
    $
    2,150
    
    
    
    2.65
    %Savings deposits
    
    
    43,410
    
    
    
    105
    
    
    
    0.98
    
    
    
    21,068
    
    
    
    8
    
    
    
    0.15Time deposits
    
    
    1.089,686
    
    
    
    12,861
    
    
    
    4.79
    
    
    
    615,253
    
    
    
    6,255
    
    
    
    4.12Other borrowings
    
    
    241,316
    
    
    
    3,249
    
    
    
    5.46
    
    
    
    211,993
    
    
    
    2,471
    
    
    
    4.73Subordinated debentures
    
    
    43,918
    
    
    
    993
    
    
    
    9.17
    
    
    
    31,959
    
    
    
    761
    
    
    
    9.66Total interest  bearing liabilities
    
    
    1,931,404
    
    
    
    21,710
    
    
    
    4.56
    
    
    
    1,209,159
    
    
    
    11,645
    
    
    
    3.91Noninterest-bearing liabilities:Demand deposits
    
    
    182,453
    
    
    
    
    
    
    
    
    
    
    
    91,027Accrued interest and other liabilities
    
    
    31,837
    
    
    
    
    
    
    
    
    
    
    
    14,466Stockholders equity
    
    
    276,725
    
    
    
    
    
    
    
    
    
    
    
    105,359Total liabilities and stockholders equity
    
    $
    2,422,419
    
    
    
    
    
    
    
    
    
    
    $
    1,420,011Net interest income/net interest spread
    
    
    
    
    
    
    18,100
    
    
    
    3.21
    %
    
    
    
    
    
    
    10,044
    
    
    
    3.01
    %Net yield on earning assets
    
    
    
    
    
    
    
    
    
    
    3.53
    %
    
    
    
    
    
    
    
    
    
    
    3.21
    %Taxable equivalent adjustment:Investment securities (2)
    
    
    
    
    
    
    66
    
    
    
    
    
    
    
    
    
    
    
    40Net interest income
    
    
    
    
    
    $
    18,034
    
    
    
    
    
    
    
    
    
    
    $
    10,004
 
 (1)
    
    Nonaccrual loans are included in loans, net of unearned income. No adjustment has been made
for these loans in the calculation of yields.(2)
    
    Interest income and yields are presented on a fully taxable equivalent basis using a tax rate
of 34 percent.  Three Months Ended March 31, (1)2007 vs. 2006Increase
    
    
    Changes Due To(Decrease)
    
    
    Rate
    
    
    Volume(Dollars in thousands)Increase (decrease) in:Income from interest-earning assets:Interest and fees on loans
    
    $
    15,894
    
    
    $
    2,292
    
    
    $
    13,602Interest on securities:Taxable
    
    
    1,679
    
    
    
    320
    
    
    
    1,359Tax-exempt
    
    
    76
    
    
    
    12
    
    
    
    64Interest on federal funds
    
    
    92
    
    
    
    10
    
    
    
    82Interest on other investments
    
    
    380
    
    
    
    53
    
    
    
    327Total interest income
    
    
    18,121
    
    
    
    2,687
    
    
    
    15,434Expense from interest-bearing liabilities:Interest on demand deposits
    
    
    2,352
    
    
    
    894
    
    
    
    1,458Interest on savings deposits
    
    
    97
    
    
    
    81
    
    
    
    16Interest on time deposits
    
    
    6,606
    
    
    
    1,151
    
    
    
    5,455Interest on other borrowings
    
    
    778
    
    
    
    410
    
    
    
    368Interest on subordinated debentures
    
    
    232
    
    
    
    (40
    )
    
    
    272Total interest expense
    
    
    10,065
    
    
    
    2,496
    
    
    
    7,569Net interest
income on a taxable equivalent basis
    
    $
    8,056
    
    
    $
    191
    
    
    $
    7,865
 
 (1)
    
    The change in interest due to both rate and volume has been allocated to volume and rate
changes in proportion to the relationship of the absolute dollar amounts of the changes in
each. Noninterest income
 12




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Three-Month Period Ended March 31,2007
    
    
    2006
    
    
    % ChangeService charges and fees on deposits
    
    $
    1,786
    
    
    $
    1,031
    
    
    
    73.2
    %Mortgage banking income
    
    
    950
    
    
    
    531
    
    
    
    78.9Investment securities gains
    
    
    243
    
    
    
    
    
    
    
    Change in fair value of derivatives
    
    
    (152
    )
    
    
    70
    
    
    
    (317.1
    )Increase in cash surrender value of life insurance
    
    
    448
    
    
    
    420
    
    
    
    6.7Other income
    
    
    811
    
    
    
    450
    
    
    
    80.2Total
noninterest income
    
    $
    4,086
    
    
    $
    2,502
    
    
    
    63.3
    %
  Noninterest expenses
 Income tax expense
 Provision for Loan Losses
  13




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##### Table of Contents



Short-term liquid assets
 Investment Securities
  Investment Portfolio
 Available for SaleMarch 31,
    
    
    December 31,
    
    
    Percent2007
    
    
    2006
    
    
    Change(Dollars in thousands)U.S. agencies
    
    $
    104,566
    
    
    $
    111,852
    
    
    
    (6.51
    )%State and political subdivisions
    
    
    13,344
    
    
    
    12,942
    
    
    
    3.10Mortgage-backed securities
    
    
    181,720
    
    
    
    184,453
    
    
    
    (1.48
    )Corporate debt and other securities
    
    
    43,207
    
    
    
    45,469
    
    
    
    (4.97
    )Total investment securities
    
    $
    342,837
    
    
    $
    354,716
    
    
    
    (3.34
    )%
 Loans
 14




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##### Table of Contents



Distribution of Loans by Category
 March 31, 2007
    
    
    December 31, 2006Percent of
    
    
    
    
    
    
    Percent ofAmount
    
    
    Total
    
    
    Amount
    
    
    TotalCommercial and industrial
    
    $
    155,854
    
    
    
    9.30
    %
    
    $
    172,872
    
    
    
    10.53
    %Real estate  construction and land development
    
    
    580,047
    
    
    
    34.60
    
    
    
    547,772
    
    
    
    33.37Real estate  mortgageSingle-family
    
    
    470,697
    
    
    
    28.07
    
    
    
    456,341
    
    
    
    27.80Commercial
    
    
    372,474
    
    
    
    22.20
    
    
    
    362,542
    
    
    
    22.09Other
    
    
    44,781
    
    
    
    2.67
    
    
    
    46,895
    
    
    
    2.86Consumer
    
    
    51,558
    
    
    
    3.08
    
    
    
    54,462
    
    
    
    3.32Other
    
    
    1,180
    
    
    
    .08
    
    
    
    438
    
    
    
    .03Total loans
    
    
    1,676,591
    
    
    
    100.0
    %
    
    
    1,641,322
    
    
    
    100.0
    %Unearned income
    
    
    (1,274
    )
    
    
    
    
    
    
    (1,794
    )Allowance for loan losses
    
    
    (18,977
    )
    
    
    
    
    
    
    (18,892
    )Net loans
    
    $
    1,656,340
    
    
    
    
    
    
    $
    1,620,636
 Deposits
   Total Deposits
 March 31,
    
    
    December 31,
    
    
    Percent2007
    
    
    2006
    
    
    Change(Dollars in thousands)Noninterest-bearing demand
    
    $
    189,729
    
    
    $
    191,323
    
    
    
    (0.83
    )%Interest-bearing demand
    
    
    512,327
    
    
    
    552,887
    
    
    
    (7.33
    )Savings
    
    
    43,651
    
    
    
    42,717
    
    
    
    2.18Time deposits
    
    
    1,114,986
    
    
    
    1,083,914
    
    
    
    2.86Total deposits
    
    $
    1,860,693
    
    
    $
    1,870,841
    
    
    
    (0.54
    )%
 15




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##### Table of Contents



Borrowings
 Allowance for Loan Losses
        16




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##### Table of Contents



SUMMARY OF LOAN LOSS EXPERIENCE
 Three-MonthPeriod Ended
    
    
    Year EndedMarch 31,
    
    
    December 31,2007
    
    
    2006
    
    
    2006(Dollars in Thousands)Allowance for loan losses at beginning of period
    
    $
    18,892
    
    
    $
    12,011
    
    
    $
    12,011Allowance of
acquired banks
    
    
    
    
    
    
    
    
    
    
    6,697Charge-offs:Commercial and industrial
    
    
    110
    
    
    
    281
    
    
    
    1,450Real estate  construction and land development
    
    
    
    
    
    
    43
    
    
    
    378Real estate  mortgageSingle-family
    
    
    260
    
    
    
    275
    
    
    
    625Commercial
    
    
    14
    
    
    
    14
    
    
    
    416Other
    
    
    202
    
    
    
    11
    
    
    
    15Consumer
    
    
    400
    
    
    
    220
    
    
    
    860Other
    
    
    
    
    
    
    
    
    
    
    2Total charge-offs
    
    
    986
    
    
    
    844
    
    
    
    3,746Recoveries:Commercial and industrial
    
    
    170
    
    
    
    81
    
    
    
    465Real estate  construction and land development
    
    
    7
    
    
    
    1
    
    
    
    126Real estate  mortgageSingle-family
    
    
    27
    
    
    
    32
    
    
    
    102Commercial
    
    
    18
    
    
    
    24
    
    
    
    363Other
    
    
    47
    
    
    
    32
    
    
    
    73Consumer
    
    
    97
    
    
    
    62
    
    
    
    301Total recoveries
    
    
    366
    
    
    
    232
    
    
    
    1,430Net charge-offs
    
    
    620
    
    
    
    612
    
    
    
    2,316Provision for loan losses
    
    
    705
    
    
    
    600
    
    
    
    2,500Allowance for loan losses at end of period
    
    $
    18,977
    
    
    $
    11,999
    
    
    $
    18,892Loans at end of period, net of unearned income
    
    $
    1,675,317
    
    
    $
    989,576
    
    
    $
    1,639,528Average loans, net of unearned income
    
    
    1,668,124
    
    
    
    996,773
    
    
    
    1,176,844Ratio of ending allowance to ending loans
    
    
    1.13
    %
    
    
    1.21
    %
    
    
    1.15
    %Ratio of net charge-offs to average loans (1)
    
    
    0.15
    %
    
    
    0.25
    %
    
    
    0.20
    %Net charge-offs as a percentage of:Provision for loan losses
    
    
    87.94
    %
    
    
    102.00
    %
    
    
    92.64
    %Allowance for loan losses (1)
    
    
    13.25
    %
    
    
    20.69
    %
    
    
    12.26
    %Allowance for loan losses as a percentage of nonperforming loans
    
    
    221.18
    %
    
    
    290.60
    %
    
    
    219.88
    %
 
 (1)
    
    Annualized.  17




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##### Table of Contents



Nonperforming
Assets
 NONPERFORMING ASSETS
 March 31,
    
    
    December 31,2007
    
    
    2006(Dollars in thousands)Nonaccrual
    
    $
    7,645
    
    
    $
    7,773Accruing loans 90 days or more delinquent
    
    
    432
    
    
    
    514Restructured
    
    
    503
    
    
    
    305Total nonperforming loans
    
    
    8,580
    
    
    
    8,592Other real
estate owned and repossessed assets
    
    
    1,581
    
    
    
    1,821Total nonperforming assets
    
    $
    10,161
    
    
    $
    10,413Nonperforming loans as a percentage of loans
    
    
    0.51
    %
    
    
    0.52
    %Nonperforming assets as a percentage of loans plus nonperforming assets
    
    
    0.61
    %
    
    
    0.63
    %Nonperforming assets as a percentage of total assets
    
    
    0.41
    %
    
    
    0.43
    %
   March 31,
    
    
    December 31,2007
    
    
    2006(Dollars in thousands)Commercial and industrial
    
    $
    1,077
    
    
    $
    704Real estate  construction and land development
    
    
    2,008
    
    
    
    2,067Real estate  mortgagesSingle-family
    
    
    2,436
    
    
    
    2,805Commercial
    
    
    2,007
    
    
    
    1,765Other
    
    
    477
    
    
    
    688Consumer
    
    
    575
    
    
    
    559Other
    
    
    
    
    
    
    4Total nonperforming loans
    
    $
    8,580
    
    
    $
    8,592
  Impaired Loans
 18




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##### Table of Contents



Outstanding
    
    
    SpecificBalance
    
    
    Allowance(Dollars in thousands)Commercial and industrial
    
    $
    966
    
    
    $
    451Real estate  construction and land development
    
    
    2,055
    
    
    
    313Real estate  mortgagesCommercial
    
    
    2,262
    
    
    
    414Other
    
    
    551
    
    
    
    145Total
    
    $
    5,834
    
    
    $
    1,323
 Potential Problem Loans $ $
 Regulatory Capital.
 To Be WellFor Capital
    
    Capitalized UnderAdequacy
    
    Prompt CorrectiveActual
    
    Purposes
    
    ActionAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioAs of March 31, 2007Tier 1 Core Capital (to Adjusted Total Assets)Corporation
    
    $
    175,718
    
    
    
    7.61
    %
    
    $
    92,322
    
    
    
    4.00
    %
    
    $
    115,403
    
    
    
    5.00
    %Superior Bank
    
    
    180,493
    
    
    
    7.86
    
    
    
    91,882
    
    
    
    4.00
    
    
    
    114,852
    
    
    
    5.00Total Capital (to Risk Weighted Assets)Corporation
    
    
    194,196
    
    
    
    10.58
    
    
    
    146,740
    
    
    
    8.00
    
    
    
    183,425
    
    
    
    10.00
    %Superior Bank
    
    
    198,921
    
    
    
    10.91
    
    
    
    145,859
    
    
    
    8.00
    
    
    
    182,324
    
    
    
    10.00Tier 1 Capital (to Risk Weighted Assets)Corporation
    
    
    175,718
    
    
    
    9.58
    
    
    
    N/A
    
    
    
    N/A
    
    
    $
    110,055
    
    
    
    6.00
    %Superior Bank
    
    
    180,493
    
    
    
    9.90
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    109,394
    
    
    
    6.00Tangible Capital (to Adjusted Total Assets)Superior Bank
    
    
    180,493
    
    
    
    7.86
    
    
    
    34,456
    
    
    
    1.50
    
    
    
    N/A
    
    
    
    N/A
    19




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##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
  20




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##### Table of Contents



ITEM 4. CONTROLS AND PROCEDURES
       
 PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  21




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##### Table of Contents



ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. OTHER INFORMATION
  
 ITEM 6. EXHIBITS
  10.1
    
    Loan Agreement, dated January 26, 2007, between Superior
Bancorp and U.S. Bank National Association.10.2
    
    Stock Pledge Agreement, dated January 26, 2007, given by
Superior Bancorp in favor of U.S. Bank National Association.31.01
    
    Certification of principal executive officer pursuant to Rule 13a-14(a).31.02
    
    Certification of principal financial officer pursuant to 13a-14(a).32.01
    
    Certification of principal executive officer pursuant to 18 U.S.C. Section 1350.32.02
    
    Certification of principal financial officer pursuant to 18 U.S.C. Section 1350.
 22




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##### Table of Contents



SUPERIOR BANCORP

(Registrant)Date: May 10, 2007
    By:
    /s/ C. Stanley BaileyC. Stanley BaileyChief Executive OfficerDate: May 10, 2007
    By:

/s/
Mark A. TarnakowMark A. TarnakowChief Financial Officer

(Principal Financial and Accounting Officer) 23